Vina Nest LLC v. Aced Trading

The Court OVERRULES the demurrer filed by Leaflink, Inc. Cross-Defendant Leaflink, Inc. is to file an answer or other responsive pleading to the Cross-Complaint by September 22, 2026. Moving party is ordered to give notice.

Demurrer to Complaint Motion to Strike Tentative Ruling The demurrer is overruled. The motion to strike is granted in part (with leave to amend) and denied in part.

Background

This case arises out of a dispute regarding a contract for cold warehouse storage services for imported food products. On April 27, 2026, Vina Nest, LLC ("Plaintiff") filed the complaint in this action against Aced Trading, Eric Liang (collectively "Defendants"), and Does 1 through 25, asserting causes of action for: (1) breach of contract; (2) conversion; (3) violation of Commercial Code sections 7209 & 7210; and (4) unfair business practices (Business and Professions Code sections 17200 et seq.). On June 29 and July 1, 2026, Defendants filed this demurrer and motion to strike. Plaintiff filed oppositions on August 25, and Defendants filed replies on September 1. No trial date has been set.

Legal Standard

Demurrer Code of Civil Procedure section 430.10 provides: "The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds: ... (e) The pleading does not state facts sufficient to constitute a cause of action . .. ." A general demurrer under Code of Civil Procedure section 430.10, subdivision (e), tests whether the complaint states a cause of action. (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388; Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see also 1 Weil & Brown, California Practice Guide: Civil Procedure Before Trial [2025], P. 7:40.)

"We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed." (Centinela Freeman Emergency Medical Associates v. Health Net of California (2016) 1 Cal.5th 994, 1010; Blank v. Kirwan (1985) 39 Cal.3d 311, 318; accord Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924; Marina Pacific Hotel and Suites v. Fireman's Fund Insurance Company (2022) 81 Cal.App.5th 96, 104.)

All reasonable inferences must be drawn in favor of the pleading. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; Marina Pacific Hotel and Suites, supra, 81 Cal.App.5th at p. 104.) Even "improbable" facts alleged in the pleading must be accepted as true. (Marina Pacific Hotel and Suites, supra, 81 Cal.App.5th at pp. 104-105.) Courts must "liberally construe the pleading" and "give the complaint a reasonable interpretation, reading it as a whole and its parts in context." (Id. at p. 105.)

A complaint must contain a "statement of facts constituting the cause of action, in ordinary and concise language." (Code Civ. Proc., Sec. 425.10, subd. (a)(1); see also C.A. v. William S. Hart High School Dist. (2012) 53 Cal.4th 861, 872 ["the complaint need only allege facts sufficient to state a cause of action"].) Ordinarily, a complaint "is sufficient if it alleges ultimate rather than evidentiary facts." (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) Ultimate facts are those upon which "the right to recover depends" and are "essential" to the cause of action. (Estes v.

Eaton Corp. (2020) 51 Cal.App.5th 636, 643 fn. 2; see also 1 Weil & Brown, supra, P. 6:124.) A plaintiff is required to plead only "the essential facts of [its] case" that are sufficient "to acquaint a defendant with the nature, source and extent of [the] cause of action." (Doe, supra, 42 Cal.4th at p. 550.) Mere boilerplate or pleading of legal conclusions is not sufficient. (Id. at p. 551 fn. 5.) But a plaintiff need not allege "each evidentiary fact that might eventually form part of plaintiff's proof" at trial. (C.A., supra, 53 Cal.4th at p. 872.)

A demurrer can be sustained only when it disposes of an entire cause of action. (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119; Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046.) Leave to amend should be granted when "there is a reasonable possibility that the defect can be cured by amendment." (Centinela Freeman, supra, 1 Cal.5th at p. 1010; Blank, supra, 39 Cal.3d at p. 318; Shaeffer v. Califia Farms (2020) 44 Cal.App.5th 1125, 1145.)

Motion to Strike Under Code of Civil Procedure section 435, "Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof." (Code Civ. Proc., Sec. 435, subd. (b)(1).) Code of Civil Procedure section 436 provides: "The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court." (Code Civ. Proc., Sec. 436.) In ruling on a motion to strike, the court must assume the truth of the properly pleaded facts in the complaint or other pleading. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63.)

Meet and Confer Requirement Before filing a demurrer or motion to strike, the parties must "meet and confer in person, by telephone, or by video conference." (Code Civ. Proc., Sec. 430.41, subd. (a) & Sec. 435.5, subd. (a) .) This requirement has been satisfied. (Alkana Decls., P.P. 2-3.)

Discussion

DEMURRER Defendants demur to each of the four causes of action in the complaint. The Court will review each cause of action in turn.

First Cause of Action (Breach of Contract) The elements of a cause of action for breach are contract are: "(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821; see also, e.g., Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Here, Plaintiff alleges that it entered into agreements with Defendants whereby Defendants agreed to provide cold storage for Plaintiff's goods; the contracts provided the Defendants would store Plaintiff's goods and release them upon demand once storage charges were paid in full. (Compl., P.P. 9-10.)

Plaintiff provides that these agreements were memorialized in invoices numbered WH-25130, WH-25151, WH-25152, and WH-25153. (Compl., P. 11.) Plaintiff contends that it performed all the conditions required by the agreements including timely payment, but Defendants refused to release Plaintiff's goods. (Compl., P.P. 13-14.) Instead, Defendants sold or disposed of the goods for their own benefit. (Compl., P. 15.) Plaintiff contends it has suffered $258,536.14 in damages. (Compl., P. 18.) Plaintiff alleges contracts with both Defendants, sets forth the essential terms of the agreements, and alleges facts sufficient to establish each of the other elements of a cause of action for breach of contract.

That is all that is required at the pleading stage. On demurrer, the Court must accept the allegations in the complaint as true. The demurrer to the First Cause of Action is overruled.

Second Cause of Action (Conversion) "Conversion is the wrongful exercise of dominion over the property of another." (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.) The elements of a cause of action for conversion are: (1) that the plaintiff owned, possessed, or had a right to possess property; (2) that the defendant substantially interfered with the plaintiff's ownership, possession, or right of possession; (3) that the plaintiff did not consent; and (4) that the defendant's conduct was a substantial factor in causing harm to the plaintiff." (Ibid.; CACI No. 2100.)

Here, Plaintiff alleges that Defendants agreed to store certain imported food items belonging to Plaintiff, that Plaintiff delivered the items to Defendants, and that Defendants (without the consent of Plaintiff) exercised control over the items and ultimately sold them to third parties for the benefit of Defendants. (Compl., P.P. 10, 12, 14-15, 27-29.) Although Plaintiff appears to have alleged each element of a cause of action for conversion, Defendant argues that the cause of action is nevertheless barred by the economic loss rule. "The economic loss rule is a device ... that courts have developed to address and protect the often elusive boundary between tort and contract law." (Rattagan v.

Uber Technologies, Inc. (2024) 17 Cal.5th 1, 19.) "In general, there is no recovery in tort for negligently inflicted purely economic losses, meaning financial harm unaccompanied by physical or property damage." (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922; see also, e.g., Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 400.) The economic loss rule is not, however, "an absolute bar to tort recovery in every case in which the parties have a contractual relationship." (Rattagan, supra, 17 Cal.5th at p. 23.)

As our Supreme Court recently explained: "Courts generally permit tort suits if the defendant allegedly violated a duty rooted in tort principles that is independent of the parties' contractual rights and obligations and exposed the plaintiff to a risk of harm beyond the parties' reasonable contemplation when they entered into the contract." (Ibid.) "Broader tort liability only arises if a defendant violates an independent legal duty and the type of harm that ensues was not reasonably contemplated or accounted for by the contractual parties." (Id., at p. 37; see also, e.g., Erlich v.

Menezes (1999) 21 Cal.4th 543, 551.) The conversion cause of action alleged in the complaint here arises out of the alleged violation of an independent legal duty (the duty not to exercise control or dominion over the property of another) that exists separate and apart from any contracts described in the complaint. Moreover, the Court cannot say at the pleading stage that, as a matter of law, the type of harm alleged by Plaintiff is entirely within the scope of that reasonably contemplated or accounted for by the alleged contracts.

Defendants also challenge the punitive damages allegations in this cause of action, but the Court cannot sustain a demurrer to part of a cause of action. A party seeking to challenge punitive damages allegations must do so through a motion to strike - as Defendants have done here (discussed below). Accordingly, the demurrer to the Second Cause of Action is overruled.

Third Cause of Action (Commercial Code Sections 7209 & 7210) In the Third Cause of Action, Plaintiff alleges that Defendants sold its goods without lawful authority under California Commercial Code section 7209 and 7210. (Compl., P.P. 34-35.) For purposes of Division 7 of the Commercial Code (which runs from sections 7101 through 7603), a "warehouse" is defined as "a person engaged in the business of storing goods for hire." (Comm. Code, Sec. 7102, subd. (a)(13).) Section 7209, subdivision (a) provides that a warehouse has a lien on "goods covered by a warehouse receipt or storage agreement ... in its possession for charges for storage or transportation."

Section 7210, subdivision (a) permits the enforcement of a warehouse lien by a sale of the goods (subject to certain conditions). "A warehouse is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of willful violation, is liable for conversion." (Comm. Code, Sec. 7210, subd. (i).) Plaintiff sufficiently alleges in the complaint that Defendants acted as a warehouse and also alleges each other element of a cause of action for damages under Commercial Code section 7210. (Compl., P.P. 9-12, 15, 28, 35-36.)

The demurrer to the Third Cause of Action is overruled.

Fourth Cause of Action (Business & Professions Code Sections 17200, et seq.) To state a cause of action for a violation of the Unfair Competition Law, Business and Professions Code sections 17200-17210 (the "UCL"), a plaintiff must allege that a defendant engaged in an "unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising," or certain other specific acts. (Bus. & Prof. Code, Sec. 17200.) The UCL "uses the terms 'unlawful, unfair or fraudulent' in the disjunctive . . . [such that] [v]irtually any statute or regulation (federal or state) can serve as a predicate for a UCL unlawful practice cause of action." (Gutierrez v.

Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1265.) But a cause of action under the UCL "is not an all-purpose substitute for a tort or contract action." (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.) Plaintiff alleges sufficient predicate acts to state a cause of action for violation of the UCL, including (but not necessarily limited to) a violation of Commercial Code sections 7209 and 7210. Plaintiff also sufficiently alleges that it sustained an injury and therefore has standing to bring a UCL cause of action. (Compl., P.P. 17-18, 40.)

Defendants argue that Plaintiff lacks standing because it specifically alleges that it does not seek damages under the UCL (Compl., P. 41), but that simply reflects the law: the UCL does not provide for an award of damages to a private entity plaintiff. Plaintiff alleges that it seeks restitution for harm it suffered, which is sufficient at the pleading stage. The demurrer to the Fourth Cause of Action is overruled.

MOTION TO STRIKE Defendants move to strike (1) punitive damages allegations (in paragraphs 30 and 31 and item 2 of the prayer for relief; (2) the allegation in paragraph 4 that Defendant Liang is the owner, managing agent, and/or alter ego of Defendant Aced Trading and "personally participated in the acts alleged herein"; (3) item 4 of the prayer for relief, for an injunction; and (4) item 3 of the prayer for relief, for restitution and disgorgement.

Punitive Damages To recover punitive damages in a tort action, Civil Code section 3294 requires a plaintiff to prove by clear and convincing evidence "that the defendant has been guilty of oppression, fraud, or malice." (Civ. Code, Sec. 3294, subd. (a); see also College Hosp., Inc. v. Super. Ct. (1994) 8 Cal.4th 704, 721; Smith v. Super. Ct. (1992) 10 Cal.App.4th 1033, 1042.) "Malice" is defined in section 3294, subdivision (c)(1), as "conduct which is intended by the defendant to cause injury" or "despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others." "Oppression" is defined in section 3294, subdivision (c)(2), as "despicable conduct subjecting a person to cruel and unjust hardship in conscious disregard of that person's rights." "Fraud" is defined in section 3294, subdivision (c)(3), as "an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury."

The term "despicable conduct," as used in subdivisions (c)(1) and (c)(2), has been defined in the case law as actions that are "base," "vile," or "contemptible." (See, e.g., College Hospital, supra, 8 Cal.4th at p. 725; Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal. App. 4th 847, 891; see also CACI 3940 ["Despicable conduct is conduct that is so vile, base, or contemptible that it would be looked down on and despised by reasonable people."].) A plaintiff seeking punitive damages must include in the complaint "specific factual allegations showing that defendant's conduct was oppressive, fraudulent, or malicious." (Today's IV, Inc. v.

Los Angeles County Metropolitan Transit Authority (2022) 83 Cal.App.5th 1137, 1193; see also Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643; Smith, supra, 10 Cal.App.4th at pp. 1041-1042; 1 Weil & Brown, California Practice Guide: Civil Procedure Before Trial (2025), P. 6:158.). "Punitive damages may not be pleaded generally." (Today's IV, Inc., supra, 83 Cal.App.5th at p. 1193; see also Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1055-56.)

Pleading negligence, gross negligence, or even recklessness is not sufficient. (Dawes v. Super. Ct. (1980) 111 Cal. App. 3d 82, 87.) Rather, a plaintiff must allege facts demonstrating that the defendant intended to cause harm to plaintiff or "acted in such an outrageous and reprehensible manner that the jury could infer that [the defendant] knowingly disregarded the substantial certainty of injury to others." (Id. at p. 90; see also, e.g., American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017.)

Additional requirements apply when a plaintiff seeks to recover punitive damages against an employer for the acts of an employee. As set forth in Civil Code section 3294, subdivision (b): "An employer shall not be liable for [punitive] damages ... based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.

With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation." Here, Plaintiff alleges a conversion, the wrongful exercise of dominion or control over the property of another. Conversion is an intentional tort - in the sense that Defendants must have intended their actions (the exercise of control over, and ultimate sale of, the property).

But not every conversion involves conduct that is despicable, that is intended to cause injury to Plaintiff, that is in conscious disregard of Plaintiff's rights, or that otherwise supports an award of punitive damages. General or boilerplate allegations of malice, oppression, or fraud, as appear in paragraph 30 of the complaint, are not sufficient. Moreover, there are two defendants here - an entity of unknown form and an individual. The complaint does not allege the conduct of which defendant (or both of them) that constitutes the oppression, fraud, or malice.

The complaint does not sufficiently allege specific facts showing that each defendant engaged in conduct that was malicious, fraudulent, or oppressive. Accordingly, the motion to strike the punitive damages allegations is sustained with leave to amend.

Paragraph 4 In paragraph 4 of the complaint, Plaintiff alleges that Defendant Liang was the alter ego of Defendant Aced Trading and personally participated in Aced Trading's unlawful activity. The personal participation allegation is a proper and sufficient pleading. The motion to strike this paragraph is denied.

Injunctive Relief Injunctive relief is a remedy available under the UCL. As Plaintiff has sufficiently alleged a UCL violation, it may seek the remedy of an injunction. Whether an injunction is appropriate in this case cannot be determined, as a matter of law, based on the pleading. The motion to strike the request for injunctive relief is denied.

Restitution and Disgorgement. Restitution, including restitutionary disgorgement, is a remedy available under the UCL. As Plaintiff has sufficiently alleged a UCL violation, the motion to strike the request for restitution and disgorgement is denied.

Conclusion

The Court OVERRULES the demurrer filed by Defendants Aced Trading and Eric Liang. The Court GRANTS IN PART the motion of Defendants to strike. The Court STRIKES the allegations of paragraph 30 and 31 of the complaint. The Court STRIKES item 2 of the prayer for relief. The Court otherwise DENIES the motion to strike. The Court GRANTS Plaintiff leave to file an amended complaint by no later than September 29, 2026, that addresses the defects in the pleading of a claim for punitive damages identified in this ruling

The moving party is ordered to give notice. | Home -->)" -->